Answer-The theory of interest rate parity means that the__________.

Q: Answer-The theory of interest rate parity means that the__________.

The theory of interest rate parity means that the difference between the spot rate and the forward rate reflects the difference in interest rates between two countries in the opposite direction.

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Question

The theory of interest rate parity means that

the__________.

A interest rates are equal in two countries

B difference between the spot rate and the forward rate reflects the difference in interest rates between two countries in the opposite direction

C difference between the spot rate and the future spot rate reflects the interest rate difference between two countries in the opposite direction

D future spot rate reflects the inflation difference between two countries

E all of the above

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The theory of interest rate parity means that

Solution